Asia Morning Analytics: 250110 Asia Morning Wrap

Morning readers,

Friday was some day for Hang Seng! But what's more interesting was the development on US on Friday, as we saw S&P falling another 2%, marking one of the sharpest drops over several weeks now. Market continues to set in a bearish tone, with stimulus withdrawl over China and Obama's amazing plan to take down excessive risks from banks.

Now Friday was a big hit on the market, with across the board sell-off. Notably, however, is that high valuation stocks in the consumer sector got hit the hardest, suggesting institutionals may be off the table for a while. I continue to issue caution over recent development, though, this may be the "double-dip" that we have been looking for over a year ago.

The market currently is heavily clouded by policies and recent economic developments, however, the data coming out has been relatively positive. Therefore, to a certain level, we may welcome such policy changes, though the downside risk remains to be the delicacy of the market remains intact.

We believe this may be the "catch-up" with the fundamentals as we saw the market rallying at an amazing speed last year. Hence, this may be a healthy pullback, and investors will jump on board as policy overhang fades out.

On this note, we continue to look at consumer plays, whilst a sector rotation may remain intact, as we look for lower beta plays during this downturn to perserve capital. Today should be a day looking for overreaction, and day trading opportunities.

ongy out.